Military Update: CNO supports changes to Navy retirement plan
June 30, 2005
At least one member of the Joint Chiefs supports alternatives to the military’s prized 20-year retirement plan, urging adoption of more modern ways, found in industry, to compensate ambitious, skilled workers.
Adm. Vern Clark, chief of naval operations, said the 21st century Navy needs to protect its “intellectual capital” of highly trained sailors with a mix of pays different from what worked during the Cold War, including more retirement options and a less “paternalistic” approach to compensation.
“What I’ve told our sailors is, ‘Look, we’ll spend whatever we need for every sailor we have to have to provide for the kind of national security the United States needs. But I don’t want to spend one thin dime for an individual that we really don’t need,’” Clark said during a June 20 address at the American Enterprise Institute, a Washington think tank.
With more capable sailors needed to crew a smaller, higher-tech fleet, Clark said, “we’re going to have to remunerate them in different ways … be more innovative. We’re going to have to do some things like this: Instead of having one pat retirement system, I think we’re going to have to do what the really progressive companies are doing in industry. They have a cafeteria kind of remuneration system and people get to pick the kind of benefits that they want.
“So I’m talking about going down to the baseline and starting over, with one simple goal in mind: How do I get the intellectual capital that is going to be required to win in the future?”
A Navy official later said Clark doesn’t want Congress to lower retirement benefits for current sailors. But he does endorse giving them more options than a rigid retirement plan that pays no annuities and provides no vesting in benefits until members serve at least 20 years.
Clark, who will retire in late July after 37 years of service, said the military lacks a “human capital strategy” to sustain a high-tech, all-volunteer force in the new century.
“I believe that we have to change our belief in what a [military] career even looks like. [Some] want to make the world the way it was when I came into the Navy, and today’s world isn’t like that,” Clark said. “You go out into industry and you don’t find very many people who have been with the same company for 37 years like I have … We’ve got to focus on a system that allows you to bring the skill sets into play that we need, not to cling to some architecture that fits a model that was really great in the Cold War.”
Clark said the percentage of sailors re-enlisting has been higher over the past several years than at any time in recent Navy history. He credited not the carrot of an annuity after 20 years, re-enlistment bonuses or the fact that ground forces primarily are doing the fighting in Iraq and Afghanistan. Instead, Clark cited the Navy’s commitment, since he became CNO in 2000, to sailors’ growth and development.
When he entered the Navy in 1968, Clark said, it was rare for an enlisted member to have a college degree. Today, 56 percent of top enlisted — the fleet and force master chiefs — have college diplomas. Among junior enlisted, he said, the Navy even has 17 third-class petty officers (E-4s) with their doctorates.
“This is a different world,” Clark said, and “if we’re not competing economically, we’re going to let that incredible intellectual capital walk out the door and the nation is going to be the loser.”
The solution, he suggested, is not to pay more money to all 400,000 active-duty sailors but to encourage individuals to excel and then to compensate properly based on their individual skills and talents and the needs of the service.
Today’s sailors, he said, “are willing to go take on a job for three years, knowing there is no life-time guarantee to it.”
For them, he implied, a retirement system that requires that they stay for 20 years to get any benefits is an anachronism.
“They want a chance to carve out their own future. So I believe that a mobile workplace — which is the kind of world we live in — needs to have a retirement system that can adapt,” Clark said.
Joe Barnes, national executive secretary for the Fleet Reserve Association, which represents current Sea Service members and retirees, credited Clark with expanding sailors’ professional responsibilities and educational opportunities while CNO. He endorsed Clark’s call for more targeted pay raises and other pay reforms.
But Barnes disagreed with Clark’s contention that the 20-year retirement system is less attractive to the current generation of sailors.
Also, he bristled at comparing military service to industry employment or necessarily embracing the kind of pay incentives found there.
“Military service is much different from working in the corporate world. That’s key to looking at proposals to revamp retirement … You’ve got to keep in mind the rigors of military service,” Barnes said.
Barnes also noted that the Navy and Air Force are preparing to draw down their active forces — the Navy by 13,000 sailors in 2006 alone. But the Army and Marines Corps face significant recruiting challenges tied to the war in Iraq, even as they attempt to expand active duty force strength.
A Defense Department advisory committee on military compensation is studying a proposal, for future service members, that would allow earlier vesting in retirement benefits, perhaps after five or 10 years, but with reduced annuities for anyone who would leave service before age 60.
To comment, write Military Update, P.O. Box 231111, Centreville, VA 20120-1111, e-mail firstname.lastname@example.org or visit militaryupdate.com.